The global core banking software market was valued at $10.89 billion in 2022 and is projected to grow at a CAGR of 9.3% between 2023 and 2030. This growth is fuelled by digital transformation, the shift to cloud-based services, and customer demand for real-time financial experiences. According to McKinsey, more than 65% of banks are actively exploring next-generation core banking platforms to remain competitive.
With such momentum, choosing the right core banking solution has become one of the most critical strategic decisions for financial institutions.
What is a core banking solution?
A core banking solution is the backbone of a bank’s IT infrastructure. It connects branches, digital channels, and back-office operations into one centralised system, enabling clients to access their accounts and perform transactions in real time.
Modern CBS platforms go beyond basic account management. They integrate with mobile apps, digital wallets, and third-party providers, offering banks flexibility to adapt to new business models and customer demands.
Leading players in the core banking market
The market is highly competitive, with established providers and newer cloud-native platforms offering diverse options. Some of the leading vendors include:
- SDK.finance – a modular, API-first core banking platform offering both source code licensing and PaaS models, designed to support digital wallets, neobanks, and high-volume payment systems.
- Temenos – a long-standing global provider with strong retail, corporate, and private banking solutions.
- Finastra – serving many of the world’s top banks with a flexible and open technology stack.
- FIS – a US-based provider offering a wide range of core banking and payment services.
- Oracle FLEXCUBE – widely adopted across retail and corporate banking, known for its scalability.
- Infosys Finacle – a cloud-first platform with strong adoption in emerging markets.
- Mambu – a cloud-native, API-driven platform enabling fast deployments for digital banks and fintechs.
- Backbase – focused on digital experience and front-to-back integration for banks.
- nCino – built on Salesforce, specialising in streamlining commercial and SME banking.
These players vary in focus: some target large universal banks, while others cater to mid-sized institutions or fintech entrants. The choice often depends on the bank’s size, market, and strategic priorities.
Key factors to consider when choosing a core banking solution
1. Deployment model
Banks can opt for on-premise systems hosted in their own data centres or cloud-based solutions provided by vendors. Cloud options often reduce infrastructure costs and speed up implementation, while on-premise systems may appeal to institutions with strict regulatory or data sovereignty requirements.
2. Scalability and performance
Transaction volumes continue to rise. The chosen CBS must handle current workloads and scale for future growth. For example, solutions capable of processing thousands of transactions per second ensure stability even during peak usage.
3. Flexibility and modularity
A modern CBS should feature a modular architecture, allowing banks to implement only the components they need and expand later. This approach avoids the cost and risk of full-scale replacements while supporting incremental modernisation.
4. Integration capabilities
Open APIs and compatibility with external systems are essential. Banks increasingly rely on third-party services for payments, compliance, or analytics. A CBS with strong API support simplifies integration, reduces vendor lock-in, and enables faster product launches.
5. Compliance and security
With regulations evolving across jurisdictions, a CBS must provide built-in support for KYC, AML, and data security requirements. Robust encryption, auditing tools, and compliance-ready features reduce the risk of breaches and penalties.
6. Cost and licensing model
Vendors offer different pricing structures:
- Subscription (SaaS/PaaS) – suitable for smaller institutions seeking predictable costs and faster deployment.
- Source code licence – favoured by enterprises that need full control, ownership, and customisation.
Understanding the total cost of ownership, including updates and support, helps in making a sustainable choice.
7. Vendor expertise and track record
Experience in implementing CBS across regions and client types is crucial. Banks should assess the vendor’s references, stability, and ability to support projects in their specific regulatory and market environment.
Common challenges during CBS selection
- Legacy migration: Moving data and operations from outdated systems is complex and resource-intensive.
- Vendor dependency: Choosing a provider without flexibility can limit innovation.
- Change management: Staff training and process redesign are often underestimated.
Acknowledging these challenges early helps reduce risks during implementation.
Final thoughts
The right core banking solution isn’t just about technology. It is about aligning the system with the institution’s strategic goals – whether that’s expanding into new markets, improving customer experience, or reducing operational costs.
Banks evaluating CBS options should prioritise scalability, modular design, and integration capabilities while keeping compliance and security at the core. With careful planning, the chosen solution can serve as a foundation for growth and innovation in an increasingly digital financial ecosystem.